2 TSX Dividend Stocks With Lucrative Yields in October 2023

These stocks pay great dividends that should continue to grow.

| More on:
Increasing yield

Image source: Getty Images

Top TSX dividend stocks are taking a beating, as rising interest rates make fixed-income alternatives more competitive for investor funds. Higher rates are also driving up risks of a recession. Ongoing volatility should be expected in the near term, but there is big upside potential on the next rebound.

Contrarian investors with a buy-and-hold strategy now have an opportunity to buy leading Canadian dividend stocks at cheap prices for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio.


Enbridge (TSX:ENB) is widely known for being an operator of oil pipelines, but the company has shifted its growth strategy in recent years to diversify the asset base and broaden the revenue stream. Enbridge’s latest move is a deal to buy three natural gas utilities in the United States for US$14 billion. The acquisitions will combine with the Canadian gas utility assets to make Enbridge the largest natural gas utility operator in North America.

Enbridge also sees good growth potential for exports and renewable energy. The company spent US$3 billion to buy an oil export terminal in Texas in 2021 and has a stake in the Woodfibre liquified natural gas (LNG) export facility being built in British Columbia. Last year, Enbridge acquired the third-largest U.S. developer of wind and solar projects.

ENB stock trades near $44 per share at the time of writing compared to $59 at the high point in 2022.

Rising interest rates in Canada and the United States are largely responsible for the decline. The jump in borrowing costs can put a dent in profits and reduce cash available for distributions.

That being said, Enbridge has a $17 billion capital program that will combine with the acquisition assets to support revenue growth. Enbridge increased the dividend in each of the past 28 years. At the time of writing, Enbridge stock provides a yield of 8%.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) increased its dividend earlier this year on the back of continued strong profits, despite the economic headwinds caused by rising interest rates. In the case of the banks, higher rates often result in better profits due to the boost in net interest margins. In the past year, however, the sharp increase in interest rates over a short period is putting borrowers with too much debt in a difficult position.

Bank of Nova Scotia nearly doubled its year-over-year provision for credit losses (PCL) when it reported fiscal third-quarter (Q3) 2023 results. The trend is expected to continue, as rates stay elevated and more fixed-rate loans come due for renewal.

The overall loan book, however, remains in solid shape, and Bank of Nova Scotia has done a good job over the past year of building up its capital reserves to buffer the business against a potential recession. At the current share price below $60, the stock appears to be priced for a deep downturn. Economists widely expect a recession to be short and mild as the Bank of Canada and the United States Federal Reserve work to reduce inflation to their 2% target.

Investors who buy BNS stock now can get a 7.1% dividend yield.

The bottom line on top high-yield stocks

Enbridge and Bank of Nova Scotia pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA or RRSP, these stocks look cheap right now and deserve to be on your radar.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends Bank Of Nova Scotia and Enbridge. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Enbridge.

More on Dividend Stocks

grow dividends
Dividend Stocks

2 Unloved TSX Dividend Stocks That Could Soar in 2024

These top TSX dividend stocks look cheap right now.

Read more »

TFSA and coins
Dividend Stocks

3 TFSA Stocks I’m Eyeing for My 2024 Contribution

In 2024, I'll be adding dividend stocks like Brookfield to my account.

Read more »

TFSA and coins
Dividend Stocks

Canada Revenue Agency: 1 Crucial TFSA Change You Need to Be Aware Of

The TFSA contribution limit is out for 2024 and has increased to $7,000, raising the cumulative contribution room to $95,000.

Read more »

money cash dividends
Dividend Stocks

3 Passive-Income Streams That Will Take You to the Next Level

These passive-income streams do not take a second more of your time. Focus on your day job and look forward…

Read more »

retirees and finances
Dividend Stocks

Retirees: How to Earn $5,500 Per Year in Passive Income Without Putting OAS at Risk

Retirees can use this strategy to boost tax-free income while lowering portfolio risk.

Read more »

edit Women wearing red sweater shopping online and using credit card at home office
Dividend Stocks

How to Create Enough Passive Income to Fund Your Holiday Shopping

Passive income isn't hard work when you find the right methods, and you can create so much cash holiday shopping…

Read more »

green power renewable energy
Dividend Stocks

The Smartest Canadian Stocks for Steady Passive Income

Trying to find reliable passive income and capital upside? Check out these 3 smart stocks for steady long-term returns.

Read more »

Volatile market, stock volatility
Dividend Stocks

My Top No-Brainer, High-Yield Dividend Stock to Buy in 2023

Pizza Pizza Royalty would be an excellent buy, given its stable cash flows and high dividend yield.

Read more »